Online Behavioral Marketing: A Legal Primer For Internet Advertisers

online behavioral marketing
Can websites track you and your behavior? Sure can.

Online behavioral marketing (OBM) is commonplace, and most people now understand how cookies track Web activity.

But increased use of OBM has also piqued consumer concerns. Who is doing the tracking? What information is being collected? How it is being stored? Let’s explore.

How Many Tracking Cookies Do Popular Websites Use — On Average?

How pervasive is the practice? According to The Wall Street Journal, the world’s top 50 websites deploy over 60 pieces of tracking technology per user, which has led to questions about online privacy and individual rights.

The Federal Trade Commission’s Online Behavioral Marketing Stance

The Dot Com Disclosures Is The Starting Point For FTC Compliance

The Federal Trade Commission – the quasi-governmental United States’ consumer protection agency – advises Internet marketers to follow guidelines delineated in the Dot Com Disclosures. If a marketing campaign uses cross-site tracking techniques, the FTC expects you to provide notice and choice.

According to the FTC, What Is An Adequate “Marketing Notice”?

What constitutes notice? In the U.S., notice is an easy-to-find disclosure statement. International requirements, however, vary – which we’ll get to in a second.

If a third party is serving ads to your website, you MAY not have to provide a disclosure, so long as the party serving the ads includes a statement link within the advertisements.

Mobile Behavioral Marketing Considerations

In addition to current and future FTC guidelines, mobile online behavioral marketers should adhere to the Mobile Application Privacy Policy — a set of behavioral marketing standards developed by the Mobile Marketing Association.

The MMA says mobile marketers should include the following information in online behavioral marketing disclosures:

  • Type of information being collected;
  • How the information will be used;
  • Type of information shared;
  • How information is shared ;
  • How information is kept secure;
  • Explanation of policy change notifications; and
  • COPPA requirements, if it’s an app that targets or attracts kids.

What About Foreign Online Behavioral Marketing Standards? Do I have to Follow the Stricter EU Rules If I’m Based In The US?

Since political boundaries are constantly crossed online, nearly every “wired” country has debated the effects of OBM on their citizenry, but the solutions look different from region to region.

Asia Online Behavioral Marketing

Some Asian countries took an authoritarian route: the government censors and monitors web activity. For example, in South Korea, every citizen is given an “Internet ID number,” which must be used to access online content.

Canada Online Behavioral Marketing

The Privacy Commissioner of Canada released an online behavioral advertising framework, which states that organizations must alert consumers about OBM technologies in a clear and understandable way, plus provide an easy opt-out mechanism.

UK Online Behavioral Marketing

People doing business with UK consumers must comply with the nation’s “cookie law.

If you market to French citizens, know that the country’s guidelines don’t deem browser-default cookie acceptance as valid consent.

At the time of this (original) writing, the United States has yet to pass a universal online privacy bill. Currently, the industry is largely self-regulated.

U.S. Federal Privacy Law?

Most Americans (without the last name Kardashian) value privacy, so it may be surprising to learn that the U.S. doesn’t have a federal online privacy law — save for a handful of financial, health, and age-specific electronic privacy data laws. But it’s not for lack of trying; the past three presidential administrations have tried – and failed – to pass a universal Internet privacy act.

Why Can’t The United States Pass A Universal Online Privacy Law?

Why is it so difficult to push a national Internet privacy law through? Per usual, the bottle neck is largely a result of opposing views among powerful and partisan factions. Established online businesses, marketers, social media companies, and startups firmly believe that the best way to standardize online privacy is self-regulation, while various consumer protection groups are pushing for a codified statute.

There Is An Industry-Wide, Online Behavioral Marketing Self-Regulatory Standard, Which You CAN Be Fined For Breaking

In 2009, the industry adopted a self-regulatory program. The Online Internet-Based Advertising Accountability Program – a division of the Council of Better Business Bureaus – was appointed as the enforcement agency. In 2011, it was announced that six companies had been censured for not complying with industry benchmarks:

  • Forbes Media Extension (FMX) was found to have an opt-out that expired in less than six months;
  • Martini Media was found to have an opt-out that expired in less than six months;
  • PredictAd was found to have an opt-out that expired in less than one month;
  • QuinStreet was found to have an opt-out system that didn’t function properly;
  • Reedge was found to have an opt-out that expired in one year;
  • Vertura was found to have an opt-out system that didn’t function properly.

All the companies named above agreed to change their procedures and worked closely with the council to ensure all measures were correctly implemented.

A Note About Flash Cookies

Several companies that use flash cookies have faced class action lawsuits because of failure to prove sufficient notice and choice. Considered an unfair and deceptive practice, flash cookie lawsuits are often filed in state courts since many of them allow for private action; in fact, one suit was settled for $2.4 million.

Contact Online Behavioral Marketing Attorney

If you’re considering using online behavioral marketing techniques, it’s a good idea to consult with an Internet lawyer who can examine your campaign and point out any non-compliant aspects. Those who engage in international e-commerce are particularly vulnerable, since laws vary by country (even by state.) Get in touch today; we’ll asses your procedures and help make sure you’re operating in the clear.